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REUTERS: The late launch of the new 5G phones caused Apple Inc customers to postpone buying new devices, prompting the company to report the steepest quarterly drop in iPhone sales in two years on Thursday.
Apple fell more than 5 percent at one point in after-hours trading, wiping $ 100 billion from its market value.
Since 2013, Apple has delivered new iPhones every September like a watch. But pandemic-induced delays delayed the announcement by a month, with some devices yet to ship.
Even as booming sales of Mac and AirPods drove overall revenue and earnings above analysts expected, iPhone sales fell 20.7 percent to $ 26.4 billion. (Graphic: https://tmsnrt.rs/3ecmgCG)
Investors anticipated lower sales of the Cupertino, California-based company’s best-selling product, but retention was worse than expected, especially in China, where more consumers have access to 5G than in the United States or Europe.
Apple has mostly exceeded sales expectations this year, launching a host of new products and services that its customers adopted while homebound during the pandemic.
Apple said revenue and earnings for the fiscal fourth quarter ending September 26 were $ 64.7 billion and 73 cents a share, compared to analyst estimates of $ 63.7 billion. and 70 cents per share, according to IBES data from Refinitiv.
But the announcement of the flagship iPhone 12 was delayed until October 13, several weeks later than usual, which means that iPhone sales during the opening weekend are not included in the fourth quarter results.
In an interview with Reuters, Apple Chief Executive Tim Cook said he was “optimistic” about the iPhone 12 cycle based on the first five days of shipping data.
“5G is a once in a decade opportunity. And we couldn’t be more excited to hit the market exactly when we did,” Cook said. “At least in the United States, operators are being very aggressive.”
The timing of the iPhone 12 launch cut sales in Greater China by 28.5 percent to $ 7.95 billion. Cook said he hopes the new 5G devices will help China iPhone sales rebound.
“What we are seeing at the beginning of the first five days gives us a lot of confidence that China will grow again in our first fiscal quarter,” Cook told Reuters.
Apple did not provide a revenue growth forecast, but CFO Luca Maestri said that revenue from non-iPhone products and services will grow by double-digit percentages in the first fiscal quarter, in line with the expectations of the analysts. He said iPhone revenue would grow as well, implying that the rate would be in the single digits. Analysts expect iPhone revenue to increase 6.45% to $ 59.56 billion in the first quarter, according to data from Refinitiv.
Logan Purk, an analyst at Edward Jones, said that “while iPhone sales will grow in this cycle, it will be disappointing compared to lofty expectations as we do not believe 5G presents a compelling reason for a wave of updates.
Apple has offset volatile iPhone sales in recent years with steady growth in its services segment, which includes streaming music and television. Revenue from services increased 16.3 percent to $ 14.5 billion, compared with analysts’ estimates of $ 14 billion. Cook told Reuters that Apple One, a bundle of Apple’s payment services, will launch on Friday.
Cook told Reuters that Apple has 585 million paying subscribers on its platforms, up from 550 million in the previous quarter and closer to the goal of 600 million subscribers the company set for the end of the 2020 calendar.
Shares of Apple have skyrocketed in the past two years as it has diversified its sources of income to lessen its dependence on the iPhone. Thursday’s stock slide raises the question of whether Apple is still more reliant on iPhone sales than some investors expected.
“Apple needs to be able to maintain the refresh cycle or the stock price will falter because there is no real room for forgiveness in the current valuation,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
Apple said revenue from its accessories segment rose 20.8 percent to $ 7.9 billion, compared with analysts’ estimates of a 13.5 percent increase to $ 7.4 billion. million, according to Refinitiv data. Mac and iPad sales increased to $ 9.0 billion and $ 6.8 billion, compared to estimates of $ 7.92 billion and $ 6.12 billion, according to data from Refinitiv.
(Reporting by Stephen Nellis in San Franicsco; Additional reporting by Noel Randewich; Edited by Lisa Shumaker)
